Adaro?s revenue jumps 37% on higher coal price

IDX-listed coal giant PT Adaro Energy Tbk reported revenue in the first nine months of this year (9M17) increased by 37 percent to US$2.44 billion compared to the same period last year, thanks to a 42 percent increase in average selling price (ASP).

?Our coal mining and trading division generated 94 percent of our revenue. We produced 39.36 million tons (Mt) and sold 39.44 Mt of coal in 9M17,? Adaro said in a statement.

Coal production in the nine-month period was relatively flat compared to same period of last year, while sales volume declined slightly.

Elsewhere, the company said that cost of revenue increased 20 percent year over year to $1,579 million mainly driven by higher mining cost because of higher fuel prices combined with higher strip ratio, and also higher royalty payment as a result of rising ASP.

Strip ratio for the period was 4.65x, below company guidance of 4.85x for 2017 as the company experienced heavy rains at its mining operations which extended into the third quarter of this year. ?As part of our cost control measures, we have hedged approximately 50 percent of our fuel requirements for the rest of 2017 at prices below our budget to mitigate risks associated with fuel price fluctuations.?

Royalties to the Government of Indonesia increased 41 percent to $254 million as a result of higher revenue from sales of coal prompted by higher ASP, Adaro said.

The company?s operational EBITDA, which excludes non-operational items, increased 61 percent to $1,006 million as a result of higher ASP and continued cost discipline. This leads to a solid operational EBITDA margin of 41 percent, showcasing the company?s efficient operations in sustaining the margin for a period of time. ?We have achieved our operational EBITDA guidance for 2017, and are gearing towards the higher end of $900 million to $1,100 million guidance.?

Meanwhile, core earnings rose 76 percent to $495 million demonstrating solid core business performance. Core earnings excludes non-operational items net of tax.

Total assets of $6,852 million were 12 percent higher than the same period last year. Current assets increased by 47 percent to $2,092 million, mainly due to higher cash balance. Non-current assets increased slightly by 1 percent to $4,761 million.

Total liabilities increased 7 percent compared to the same period last year to $2,790 million. Current liabilities increased by 41 percent to $819 million to some extent due to higher trade payables and taxes payable. ?Non-current liabilities declined by 3 percent to $1,971 million mainly due to lower long term borrowings positions as we continued to pay down our debt.?

Elsewhere, Adaro said in the third quarter of 2017, the company produced 14.23 Mt of coal from PT Adaro Indonesia (AI), Balangan Coal Companies and Adaro MetCoal Companies (AMC), a 6 pecent increase compared to the third quarter of 2016.

Adaro?s total coal production for 9M17 reached 39.36 Mt, flat y-o-y. Overburden removal in 3Q17 increased by 12 percent to 71.40 million bank cubic meter (Mbcm) compared to 3Q16. The blended average strip ratio for the quarter was 5.02x and 4.65x for 9M17. The company expects blended average strip ratio to reach guidance of 4.85x. In the quarter, Adaro sold 14.17 Mt of coal, 6 percent higher compared to 3Q16. Total sales volume for 9M17 was 39.44 Mt, a 2 percent decline compared to 9M16.

The company?s sales destination in 9M17 was dominated by developing countries in Asia. Domestic market continued to be a priority for the company, and Indonesia accounted for 20 percent of Adaro Energy?s sales in 9M17. ?Our sales portion to China and South Korea increased to 14% and 10%, respectively, in-line with both countries? move to use imported coal to fulfill increased demand.?

Editing by Reiner Simanjuntak